BoT likely to keep policy rate on hold

The Bank of Thailand (BoT) will hold its regular meeting on 29 April. Markets appear to be pricing in a 25bps rate cut to 1.50% at this meeting. This follows the dovish statement by the BoT's Director of Macroeconomic Policy Don Nakornthab on 23 April that GDP likely dropped from Q4-2014 to Q1-2015 on weak exports and private consumption.

However, the statement aims to support the central bank's surprise 25bps rate cut at its March meeting rather than signal another cut. 

Therefore, Standard Chartered expects the BoT to keep the policy rate on hold at 1.75% at the coming meeting. More importantly, political pressure for a further rate cut is low at present. 

The government's think tank, the National Economic and Social Development Board (NESDB), expects the economy to have grown more than 3.0% y/y in Q1, versus 2.3% in Q4-2014. It also thinks the government's 2015 GDP growth target of 3.5-4.5% will be achieved. 

Such a hawkish statements indicate less need for a further rate cut.